California property taxes work differently from most states, and two ballot measures — Proposition 13 and Proposition 19 — shape the math for buyers, sellers and families passing homes between generations. This is an overview, not tax advice; confirm specifics with a CPA or the county assessor.
Proposition 13: the base rule
Under Prop 13, a property's assessed value is set at market value when you buy it, and can rise only about 2% per year after that, regardless of how much the market climbs. The base tax rate is 1% of assessed value, plus local voter-approved bonds and assessments — an effective rate of roughly 1.1%–1.25% in most Bay Area counties.
Two consequences: long-time owners often pay far less tax than a new buyer next door, and your tax bill resets to your purchase price when you buy. Budget for that, not for the seller's current bill.
Proposition 19: portability for eligible owners
Prop 19 (effective 2021) lets homeowners who are 55 or older, severely disabled, or victims of a wildfire or natural disaster transfer their existing Prop 13 assessed value to a replacement primary residence anywhere in California, up to three times. If the new home costs more, the difference is added to the transferred base.
- Why it matters for sellers: older owners who felt "locked in" by a low tax basis can now move without a tax penalty — which can free up more listings.
- Why it matters for buyers: more move-up and downsizing activity among long-time owners.
Proposition 19: the family transfer change
Prop 19 also narrowed the parent-child (and grandparent-grandchild) exclusion. Previously, a child could inherit a parent's home and keep the low assessed value even as a rental. Now, the child generally must use the home as their own primary residence to keep the exclusion, and even then only a limited amount of the assessment benefit is protected — value above that threshold is reassessed.
Families who own California property should review their estate plans with a professional in light of this change; strategies that worked before Prop 19 may not anymore.
For buyers, the practical takeaway is simple: your property tax is based on what you pay, and it follows you — plan around your number, not the seller's.
Supplemental tax bills
After you buy, expect a one-time supplemental tax bill covering the difference between the seller's old assessment and your new one, prorated for the remainder of the tax year. It often arrives months after closing — set the money aside so it isn't a surprise.